B Corps Go Global: Sistema B Certifies South American Social Enterprise

Posted by Alex Goldmark

sistema b

Last fall, a small group of social entrepreneurs from South America met to discuss how to foster more social enterprise in the region and create more bang for the buck at existing enterprise. The result was Sistema B, the first effort to adapt the American system of B Corporations—which ease operations for companies that combine profit and social good—to a foreign setting.

“We want to build a global movement,” says Juan Pablo Larenas, co-founder of Sistema B. “We already started in Argentina, Chile and Colombia. We also have a plan to start this year in Brazil… we see huge momentum.”

The 521 certified B Corporations in the United States are for-profit companies that agree to blend social, environmental, and community impact into their business models, and to consider those factors along with earnings in company strategy decisions. The idea came out of the B Lab in 2006, and the group slowly built membership and tested evaluation methods. Last year, the concept attracted national attention when states including California and New York legally recognized a new corporate structure, the benefit corporation, based on the B Corp model.

"We were researching different experiences related social enterprise all over world, and we found out about the experience of B Corporations in the U.S.," Larenas says, "so we took a plane and decided to go meet the co-founders of B Lab."

Early as it might seem for a young idea to be expanding, there is demand for export. Larenas hopes to certify 500 Latin American B Corporations—or as they’re called in Spanish, Empresas B—in three years. "[Latin American] society is a little bit tired of the role companies play, which is all about growth and products," he says. Many Empresas B already operate in South America; according to Larenas, they just don’t know they meet the standard. They need a framework, an umbrella to leverage their existing social and environmental work, and a trusted certification to separate the real thing from greenwashing.

Sistema B, which launched in February, eventually will cover Chile, Argentina, Colombia, and Brazil—one of the world’s most important growing economies. So far, there are just two certified Empresas B: Triciclos, a Chilean recycling consultant, and Ouro Verde, which makes food products from an Amazonian nut. Larenas’ own company, Late!—which sells bottled water and uses 100 percent of the profits to fund programs for kids in poverty—is undergoing certification.

Sistema B plans to work out a licensing agreement with B Labs to adapt the group's proprietary certification and evaluation metrics to each country more specifically and permanently. "We’ll create a process for folks to get certified from any country," says Jay Coen Gilbert, co-founder of B Lab. Once more than five or 10 companies in a given country want to be certified, B Lab’s pro bono lawyers will dive into local laws to find out how best to tweak corporate registration. Sistema B will handle South American modifications. Other groups have already been in touch from Korea and France, Gilbert says.

"Everybody wants a tribe," Gilbert theorizes. "This is that tribe." The initiation rites are evaluation and certification—proving your authentic social impact chops, not just paying a membership fee or signing a values statement.

B Corporation certification has proven popular for U.S. businesses seeking a credible commitment to social impact. In South America, Larenas expects the certification of a growing community to improve access to capital and increase the ability of social enterprise to scale thanks to a supportive ecosystem.

Larenas has met with senior government officials in Chile to seek early commitments to incorporate Empresas B into the nation's legal system, following the policy trend in U.S. states. He envisions sub-categories of Empresas B that acknowledge different social benefits than the U.S. certification. "Economic inclusion is quite important here, for instance," he says, touting businesses that create products for underprivileged residents. 

Larenas is so confident the idea will catch on that he’s already planning a trip for September to bring the first 20 Empresas B to the United States for meetings with potential funders—even if he’s not yet sure which companies will get a seat on the plane.

Image courtesy of Sistema B